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Rep. Alexandria Ocasio-Cortez, left, and D-N.Y., Rep. Ilhan Omar, D-Minn., center, walk down the House steps to take a group photograph of the House Democratic women members of the 116th Congress on the East Front Capitol Plaza on Capitol Hill in Washington, Friday, Jan. 4, 2019, as the 116th Congress begins. Also pictured is Rep. Dina Titus, D-Nev., right. (Andrew Harnik/AP)

Radical? Or the right thing to do? We’ll analyze the numbers behind Rep. Alexandria Ocasio-Cortez’s proposal to push the top tax rate to 70 percent.

Guests

Peter Diamond, professor emeritus of economics at the Massachusetts Institute of Technology (@MIT). He won the Nobel Memorial Prize in Economic Sciences in 2010. Nominated by President Obama for the Federal Reserve Board.

Brian Riedl, senior fellow at the Manhattan Institute, where he focuses on tax and economic policies. (@Brian_Riedl)

"While details of Ocasio-Cortez’s energy proposal are unavailable, former Green-party presidential candidate Jill Stein has proposed a 'Green New Deal' costing between $700 billion and $1 trillion per year for public jobs and clean energy initiatives. That is roughly 4 percent of GDP.

"That 21 percent of GDP cost would double federal spending. And that does not even account for a baseline budget deficit rising to 7 percent of GDP over the decade — bringing the total budget gap to 28 percent of GDP.

"Even if taxing the rich could finance a Green New Deal costing 4 percent of GDP — which I will show is not possible — that would use up all the plausible upper-income tax hikes that could otherwise address the remaining baseline deficits and new liberal spending initiatives that total 24 percent of GDP (an annual budget shortfall of $5 trillion in today’s dollars). The middle class would have to pay that remaining tab."

"For those keeping score, that is $57 trillion to be financed mainly through tax hikes on the rich, even after ending the 2017 tax cuts. It would mean more than doubling the $44 trillion in projected federal tax revenues over the next decade.

"It is telling that 'just tax the rich' almost never extends beyond talking points. Advocates never specify the $12 trillion tax hike that would balance the budget. Sen. Sanders’ 'Medicare for All Act' contains none of the promised $32 trillion in offsetting tax increases."

"That could mean taxing the wealthiest Americans at a rate of 60-70 percent, the freshman Congresswoman told CBS's '60 Minutes' in an interview scheduled to air on Sunday.

"Ocasio-Cortez has put forward a 'Green New Deal' that includes generating all of the nation's power from renewable sources, building a national smart grid and entirely eliminating industrial greenhouse gas emissions. A proposal from the democratic socialist lawmaker calls for achieving those goals within 10 years.

"In the '60 Minutes' interview, Ocasio-Cortez acknowledges that taxes would have to rise to underwrite the necessary investments. Asked for a specific proposal, Ocasio-Cortez suggested the plan might require returning to policies that preceded the overhauls of the 1980s, which significantly reduced the top income tax rate."

Washington Post: "Here’s how Ocasio-Cortez’s tax comments are being misrepresented" — "We should be clear at the outset that the tax rate mentioned by freshman Rep. Alexandria Ocasio-Cortez (D-N.Y.) in an interview with '60 Minutes' was not a hard-and-fast proposal meant to be voted on in the House over the short term. Asked by interviewer Anderson Cooper what a 'fair share' of taxes looked like for wealthier Americans, Ocasio-Cortez offered an example.

"'You look at our tax rates back in the ’60s and when you have a progressive tax rate system,' she said. 'Your tax rate, you know, let’s say, from zero to $75,000 may be 10 percent or 15 percent, et cetera. But once you get to, like, the tippy tops — on your 10 millionth dollar — sometimes you see tax rates as high as 60 or 70 percent. That doesn’t mean all $10 million are taxed at an extremely high rate, but it means that as you climb up this ladder you should be contributing more.'

"That’s a broadly accurate statement: Fifty years ago, the tax rate on the highest bracket of income was indeed over 70 percent. It applied only to income past the first $400,000 or so until 1965, which is presumably what Ocasio-Cortez meant by the 'tippy tops.' "